Six reasons your business loan application was rejected

Find out what you may have missed and what you'll need to do to get approved.

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Whether you need finance for investment, equipment or to manage cash flow, there are a number of requirements you will need to meet to be approved for a business loan. If your application has been rejected, it's important to understand the reason why in order to give yourself the best chance of being approved in future.

Learn about the common reasons business loan applications are rejected, how you can fix your application and compare business loans below.

Ready to apply again? Compare business loans now

Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
Heritage Bank Fully Drawn Business Loan
$20,000
No maximum amount
1 to 25 years
Application fee is available upon application
Get access to a loan from $20,000 with no maximum limit with Heritage Bank. Loans can be secured by residential and non-residential property and have terms of up to 25 years.
Moula Business Loan
$5,000
$250,000
1 to 2 years
2% Establishment fee
A loan of up to $250,000 that can be approved and funded within 24 hours. Available to businesses with 6+ months operating history and $5,000+ monthly sales.
Swoop Finance Business Loan
$1,000
$100,000,000
1 to 30 years
Depending on your loan contract
Apply online and borrow between $1,000 and $100,000,000. Options for good and bad credit borrowers.
Lumi Unsecured Business Loan
$5,000
$300,000
3 months to 3 years
2.5% establishment fee
Apply for up to $300,000 from Lumi and benefit from short loan terms, no early repayment fees and once approved receive your funds in just one business day.
ebroker Business Loan
$5,000
$5,000,000
1 month to 30 years
$0 application fee
Small business loans available between $5,000 and $5,000,000. Get access to 70+ non-bank lenders on this independent platform.
Max Funding Unsecured Business Loan
$3,000
$30,000
1 month to 1 year
$0 application fee
An unsecured business loan from $3,000 that offers convenient pre-approval and no early repayment fees.
Valiant Finance Business Loan Broker
$5,000
$1,000,000
3 months to 5 years
$0 application fee
A Business Lending Specialist from Valiant Finance can give you access to competitive business loans from over 70 lenders. Loans between $5,000 and $1 million are available. Request a call – your loan can be funded in 1 business day.
OnDeck Business Loans
$10,000
$250,000
6 months to 2 years
3% of loan amount
Apply for up to $250,000 and receive your approved funds in one business day. Minimum annual turnover of $100,000 and 1 year of trading history required.
Octet Trade Finance
$200,000
$8,000,000
1 month to 2 years
Transaction fee 2.5%
Access a line of credit to pay suppliers in over 65 countries. Borrow from $200,000 up to $7 million.
Prospa Business Loan
$5,000
$300,000
3 months to 3 years
3% origination fee
Small business loans are available from $5,000 - $300,000 on terms of up to 3 years. At least six months trading history and a monthly turnover from $6,000 is necessary.
ANZ Secured Business Loan
$10,000
$10,000,000
Up to 15 years
$600
Benefit from a low rate when you secure this loan with property and/or business assets. Loans from $10,000 available.
ANZ Unsecured Business Loan
$10,000
$1,000,000
Up to 15 years
$600
Apply for a loan from $10,000 with no security required and benefit from flexible repayment terms.
Westpac Business Loan
$20,000
$1,000,000
1 to 30 years
$0 application fee
Purchase a new vehicle, equipment or support your cash flow with a business finance solution from Westpac.
Heritage Bank Business Line of Credit
$50,000
$500,000
Up to 25 years
The application fee amount is available upon request
Get access to a credit limit from $50,000 to $500,000 on terms of up to 25-years.
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Why was my business loan application rejected?

If you've been rejected for a business loan, the lender is likely to explain the reason your application was turned down, but this is not always the case.

Here are some common reasons your loan application may have been turned down and what you need to do before you reapply:

Having bad credit

While there are bad credit business loans available, negative marks on your credit file can usually cause you to be rejected from receiving a traditional business loan. If you’re unable to honour the financial commitments you already have, lenders are unlikely to approve your application for an additional loan. Make sure you check the eligibility criteria set out by the business lender or check with the lender directly to see if your credit history will be a problem.

Lenders usually check the credit file of the company director when approving a business for a loan, but they can also check the business's credit file for bankruptcy information and other financial details.

  • What should I do before reapplying?

You can order a free copy of your personal credit report once every 12 months within 90 days of being rejected for credit. This way you're able to check for possible errors or see where you can reorganise your finances to improve your credit rating. Before you apply again, make sure you have taken steps to improve your credit rating, or look into lenders that offer loans to businesses with bad credit.

Not meeting the lender's eligibility criteria

Many lenders will require that your business meets minimum turnover and trading history requirements in order to be eligible for a business loan. Depending on the lender, this means you may need to have been operating for at least 6 months, or in some cases, up to 18 months, and have a minimum monthly turnover of $5,000. If you don't meet these requirements, it's likely your application will be rejected.

  • What should I do before reapplying?

You will either have to wait until your business meets the specific trading requirements, or find a lender that is willing to give a loan to businesses will little-to-no trading history or turnover.

Omitting documents or details from your application

Business lenders require applicants to submit detailed financial information as part of their application. This can include business plans, cash flow projections, bank account statements, tax returns and other legal documentation related to your business.

  • What should I do before reapplying?

Make sure you have submitted all requested business documentation and information, and that your financial details are up-to-date and accurate.

Cash flow issues

All businesses have cash flow problems from time to time, but if your business is regularly struggling to manage its working capital, you may struggle to be approved for a loan. If lenders see that there’s no money for day-to-day operations, it may suggest that your business will be unable to repay the loan. It's also important to note that good cash flow doesn’t automatically qualify you for a loan, but lenders are likely to look more favourably on a business with good cash flow.

  • What should I do before reapplying?

If possible, try to manage or fix your cash flow issues. Alternatively, you could consider other business finance options, such as a business line of credit, or invoice financing, which lets you get access to credit based on your outstanding invoices.

Compare invoice financing products
Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
Timelio Invoice Finance
$10,000
$100,000,000
Up to 4 months
$0
Get up to 100% of the value of your invoices without having to wait for customer payments, and with no minimum turnover or operating history required.
ScotPac Invoice Finance
$10,000
$150,000,000
From 1 year
No set amount
Improve your business cash flow by financing your outstanding invoices. No minimum trading history required, but minimum 12 - month term and $10,000 in invoices.
ScotPac Selective Invoice Finance
$10,000
$1,000,000
1 to 3 months
$500
Finance your unpaid invoices on demand with terms of 1 - 3 months. 95% of invoice is paid upfront, with no minimum trading history required.
Octet Invoice Finance
$100,000
$10,000,000
1 month to 2 years
No Set Amount
Convert up to 85% of your company's receivables into cash flow. The value of your receivables need to be worth at least $250,000 to be eligible.
Earlypay Invoice Finance
$50,000
$15,000,000
From 1 month
No set amount
Access a revolving line of credit that grows in line with your accounts receivable. Funding available from $50,000 to $15,000,000+.
Earlypay Trade Finance
$20,000
$15,000,000
1 month to 15 years
No set amount
Get finance for 100% of your outstanding supplier invoices. Borrow from $20,000 to $15,000,000 with Earlypay.
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Insufficient collateral

Business loan lenders usually require that you use an asset, generally property, as security against the loan. If you apply for a secured business loan and either don't provide an asset or security, or provide one that doesn't meet their criteria, you will likely be rejected for the loan.

  • What should I do before reapplying?

Make sure you have an asset that is suitable to be used as security. If you don't have a suitable asset, there are also a growing number of alternative lenders offering unsecured business loans.

Applying with the wrong lender

Sometimes the reason your loan is rejected is that you are simply with the wrong lender. Institutions have varying lending criteria, so while a traditional bank might not grant you a loan, you might qualify for a loan from an online provider or another alternative lender.

However, if your application was rejected, you can represent a higher risk when you apply elsewhere. While certain providers may be more lenient than others, you might have to settle for higher rates and fees due to the recent rejected application being listed on your file.

  • What should I do before reapplying?

Find a different lender that better suits your needs, and one with eligibility criteria that your business is likely to meet. It may also be worth consulting a broker or financial adviser to help find a finance option that is right for your business.

Read our guide on how to get approved for a business loan


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